'Consumer data right' may make switching banks easier

Tuesday, 6 July 2021

A new “consumer data right” is expected to be applied first to banks.

People could find it easier to switch between banks and utilities after the Government announced it would establish a “consumer data right” giving people more control over information businesses held about them.

Consumers will be given the right to require businesses such as banks and power companies share information about them with other companies with which they want to do business.

Consumer Affairs Ministers David Clark said the consumer data right could help people get access to a wider range of products and services.

“For example, if a person was seeking financial advice, they could ask their bank to share data, such as transaction information, with their chosen adviser,” he said.

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Clark said the Government would aim to align its rules with those that Australia established in 2019.

Former commerce minister Kris Faafoi defended himself against criticism for not regulating open banking in May 2019.

He expected to introduce legislation next year.

The data right would allow the Government to designate industries that the new rules would apply to, so it could be introduced on a “sector by sector basis”, he said.

Australia’s consumer data right was first applied to banks, and then power firms.

Last year, former consumer affairs minister Kris Faafoi said the data right could help the development of open banking, and data sharing in other industries.

Bankers’ Association spokesman Philip van Dyk said it supported the initiative “in principle”.

“We agree with the Government that people should be in control of their personal information and how it’s used,” he said,

But he said keeping data secure and ensuring “privacy is protected” was incredibly important.

“Research shows that few people think sharing your personal information with third parties is a good idea,” he said.

“Third parties seeking to use consumers’ personal data will need to show they have proper safeguards in place.”

In October the association told officials it was supportive of a consumer data right regime which was “right-sized, empowers customers with control and choice over their data, and ensures consumer confidence through appropriate safeguards”.

But it said a study by officials had not properly analysed the costs and risks.

More analysis might help ensure New Zealand did not make “the same mistakes as have occurred in comparable jurisdictions”, it said then.

“In the UK there has been little evidence that the promised benefits and objectives of a consumer data right have been delivered on a large scale, despite significant levels of industry investment.”